Aurelia Butler

TORONTO (Reuters) – The Canadian dollar weakened against its U.S. counterpart on Friday, giving back some of this week’s gains, as the potential for an imminent Russian attack on Ukraine triggered a selloff in risk-sensitive assets.Wall Street tumbled and safe-havens such as U.S. Treasuries and the U.S. dollar rallied after Washington said Russia has massed enough troops near Ukraine to launch a major invasion.”It’s a flight to safety trade and that always works in favor of the U.S. dollar,” said Amo Sahota, director at Klarity FX in San Francisco.”I would be a little concerned about having open positions over the course of the weekend.”The Canadian dollar was trading 0.2% lower at 1.2742 to the greenback, or 78.78 U.S. cents, after trading in a range of 1.2670 to 1.2754. For the week, the loonie was up 0.2%.Still, the loonie fell by much less than some other currencies on Friday, as escalating Ukraine tensions added to concern about tight supply in the market for oil, one of Canada’s major exports. U.S. crude oil futures settled 3.6% higher at $93.10 a barrel.Meanwhile, Canada’s Ontario province declared a state of emergency and threatened to fine and jail protesters who have been blocking a key U.S. trade corridor for four days.The disruption to trade could weigh on Canadian economic activity in the first quarter but is unlikely to derail an interest rate hike next month by the Bank of Canada, say analysts.”The latest disruptions will raise prices and lead to shortages of some goods,” said Royce Mendes, head of macro strategy at Desjardins. “Monetary policy will be guided by inflation and inflation expectations.”Canadian government bond yields fell across the curve, tracking the move in U.S. Treasuries. The 10-year was down 7.6 basis points at 1.861. More

(Reuters) -While professional forecasters now see the U.S. economy growing more slowly in the first quarter, many have faith the Federal Reserve may be able to control inflation while keeping the economy on track, according to a survey released Friday. Economists still expect strong GDP growth for the year, supported by a robust jobs recovery, according to a survey of forecasters by the Philadelphia Federal Reserve. They also largely expect inflation to stabilize in the long term, the survey showed.Fed officials are under pressure to act more aggressively to curb price increases after a report released Thursday showed that inflation increased last month at the fastest pace in 40 years. But not all policymakers are convinced that the Fed should launch its rate increases with a half a percentage point increase, with some saying they prefer to speed up or slow down the rate increases based on what happens with inflation.Professional forecasters said they now expect the U.S. economy to grow by 1.8% in the first quarter, down from the 3.9% growth expected in November, according to the Fed survey. But they still see the economy growing by 3.7% for the year, down only slightly from previous expectations. They also see the U.S. labor market adding about 430,000 jobs a month this year – a pace that could help fill the jobs hole https://graphics.reuters.com/USA-ECONOMY/JOBS/ygdpzzqwypw caused by the pandemic levels within six months. As for inflation, forecasters said they expect price increases to ease in the longer run from the high levels seen today. Forecasters now expect the personal consumption expenditures (PCE) price index to average an annualized rate of 4.7% in the first quarter of this year, before dropping down to 3% in the second quarter. They estimate PCE will average 2.2% a year over the next decade, slightly above the Fed’s 2% target.A separate survey of consumers by the University of Michigan showed that inflation is weighing on consumer sentiment, which dropped to its lowest level in more than a decade in early February.The consumer survey one-year inflation expectations rose to 5.0%, highest since July 2008. Its five-to-10-year inflation outlook held steady at an 11-year high of 3.1%. More

The UK has signalled it could accept customs controls on goods destined only for sale in Northern Ireland, its first significant concession during months of talks with Brussels over post-Brexit trading arrangements.Liz Truss, foreign secretary, wants to resolve the dispute over the Northern Ireland protocol — part of the EU-UK withdrawal agreement — which has soured relations between London and Brussels as well as convulsing politics in the region ahead of elections on May 5. Truss, who travelled to Moscow on Thursday for talks on Ukraine, believes Europe needs to work together to tackle the geopolitical crisis in the east. “Liz thinks western democracies need to work together,” said one ally.London has so far insisted that suppliers of products shipped from Great Britain intended for sale in Northern Ireland only should no longer have to fill in customs forms as dictated by the protocol.But British negotiators on Friday told their EU counterparts they could accept controls — though far fewer than under existing arrangements or reforms proposed by Brussels.The verbal offer was considered so sensitive it has not yet been provided in written form.The proposal came during Truss’s third in-person meeting with European Commission vice-president Maros Sefcovic, held in London. British officials said there was “a constructive atmosphere” at the talks.After the meeting the pair issued a joint statement, saying they agreed “on the need for progress in their talks in the interest of people in Northern Ireland, to stay in close touch and that officials will continue intensive discussions in the coming days”.Truss’s team declined to comment but one ally said she had “put forward a series of constructive proposals to address problems created by the protocol” and to bring the two sides closer together. There was no single “offer” and the UK’s fundamental negotiating position had not shifted, they added.Under the terms of the Northern Ireland protocol, all goods going from Great Britain to the region must follow EU customs and health rules to avoid a trade border on the island of Ireland itself. But this “Irish Sea border” has offended the Unionist community in the north, which favours remaining in the UK. The commission in October had offered to create “red and green channels”, in which goods that were clearly destined to remain inside Northern Ireland, such as supermarket deliveries, would only need to provide a single customs form per load. London has now agreed to discuss this idea, but wants declarations to be even less detailed. The two sides have yet to make progress on the trickier issue of health checks on animals and food entering the region. The commission claimed its offer would reduce them by 80 per cent but the UK is unconvinced.Any customs agreement could be ratified by a meeting on February 21 of the Joint Committee, which manages the post-Brexit trading arrangements for Northern Ireland. The talks are then expected to be paused during the election campaign.EU diplomats gave a cautious welcome to the UK proposal. “It’s a positive move but we are not rolling out the red carpet yet,” said one. “There is still a long way between the two sides.”Any concessions made during the talks with Brussels could anger Eurosceptic Conservative MPs, who dislike the protocol negotiated by Boris Johnson, the prime minister, because it puts a trade border in the Irish Sea — within the UK’s internal boundaries. More

Treasuries quickly jumped to highs of the day while volumes spiked higher in 10-year note futures. U.S. National Security Adviser Jake Sullivan said that the country continues to see signs of Russian escalation, including new forces arriving at the Ukrainian border. Russia has previously denied that it currently has plans to invade Ukraine, and the U.S. said it does not believe Russian President Vladimir Putin has made a final decision.The gain in Treasuries pulled the 10-year rate down as much as 10 basis points to 1.93%, temporarily erasing the prior day’s advance. Yields plunged across the curve.“After being buffeted all week by fears of inflation and a hawkish Fed, it looks like USTs are now rallying on some safe-haven demand due to Russia tensions,” said Brown Brother Harriman & Co.’s Win Thin. “This sort of haven bid is rarely sustained, and so I think we eventually go back to selling USTs next week.”The yen, which is generally seen as a haven in times of risk aversion, climbed, while the dollar advanced against most other peers and the Russian ruble slid.With asset prices being pulled to-and-fro by inflation and geopolitical concerns “tensions in financial markets are running high,” wrote BMO’s Ian Lyngen.(Updates throughout, adds comments.)©2022 Bloomberg L.P. More

WASHINGTON (Reuters) -Toyota Motor Corp, Ford Motor (NYSE:F) Co and General Motors Co (NYSE:GM), said Friday the disruption at the Canadian border from trucking protests forced new production cuts at plants in Michigan, Ohio, West Virginia, Alabama and Ontario.Ford, the second largest U.S. automaker, said a parts shortage stemming from the border disruption forced it to temporarily halt production at its assembly plant in Ohio.Ford also said its plants in Oakville, Ontario and Windsor, Ontario are continuing to run at reduced capacity. Production at Ford’s Avon Lake, Ohio assembly plant where it builds medium-duty and super duty F-Series pickup trucks was halted on Friday, it said.Ford said separately it will suspend production next week at Avon Lake because of the ongoing global shortage of semiconductor chips.The “Freedom Convoy” by Canadian truckers opposing a vaccinate-or-quarantine mandate for cross-border drivers, mirrored by the U.S. government, began with the occupation of the Canadian capital, Ottawa. The truckers then blocked the Ambassador Bridge that connects Windsor and Detroit earlier this week, and shut down two other smaller border crossings.The bridge is North America’s busiest international land border crossing and a key supply route for Detroit’s carmakers.Toyota is trimming production at its engine plants in West Virginia and Alabama.”We expect disruptions through the weekend, and we’ll continue to make adjustments as needed,” said Toyota, the largest Japanese automaker.Toyota said on Thursday it would halt production at its Ontario and Kentucky plants through Saturday because of parts shortages tied to the protests.Chrysler-parent Stellantis said its North America plants began operations Friday morning “but a number of U.S. and Canadian plants have cut short multiple shifts throughout the week due to parts shortages caused by the closure of the Detroit/Windsor bridge.”Honda said it was temporarily suspending manufacturing on one production line during the day shift at its plant in Alliston, Ontario.General Motors, which halted work at a Michigan auto plant on Thursday because of the border issues, said it trimmed production at auto plants in Michigan and Ontario Friday.GM said production was cut during the first shift at its Flint Assembly plant where it builds pickup trucks and its CAMI Assembly in Ontario where it builds the Chevrolet Equinox. Production was scheduled to resume normally during the second shift. More